SQ to dump VS stake

So the much vaulted (8 years ago) deal between these high branded fellows looks like it will finally end with a nice profit for SQ and VS firmly back in the hands of Sir Richard the Lion Heart.

Did it fail? Yes it did not live up to its aspirations. There were 3 primary reasons that SQ took the stake.

1. An insurance policy for its alliance. At the time you will recall that United and Air Canada were hardly in the best of shape and clearly didnt have a good feed for SQ. They still dont BTW.
2. A great investment. This has been proven and so those canny chaps in SQ made that a good point.
3. Access to LHR. This issue is no longer as important as it once was.

Was it a good deal? Yes great deal all round except the synergies didnt happen and most of the expectations were not realized. There have been very few passenger benefits and VS has (probably) wisely steered clear of the Alliance game to date. Dont forget that SQ harbors significant aspirations across the Pacific with its sights set on Oz to US West Coast. These have been dashed by the likes of local hero Virgin Blue who will be flying transpac next year if they have any say in the matter.

What will happen next?

Branson likes partners. I suspect he will be on the look out for another player. However with Virgin Blue now going Transpac and Virgin America coming to an airport near you in the USA - there really is no need for a partner.

Dont look for any near term change.

Cheers

Timothy

Transatlantic For 12 quid

Perfectly feasible. Now on the radar courtesy of RyanAir's Mr O'Leary.

A canny Irish man that he is (an accountant by training in case you were unsure where his potty mouth came from), Mr O'Leary has formally announced that he will start a new sister airline to Ryanair for Transatlantic travel. Given the now enormous feed into and out of Stansted his ability to move passengers Americas to EU will be a short incremental piece rather than a leap of faith. Consider this:

1. He doesn't need a whole new aircraft - even though he wants to order 50 brand new A350XWB or 787s. In fact the Boeing 737 for which all his pilots are trained is available in an ER version (both 737-700ER and 737-900ER). http://www.boeing.com/commercial/737family/index.html
The 737-700ER unmodified has a certified range of 5510 miles. This will take you from Stansted to ISP (3478 miles) or OAK (5375 miles). Even San Diego (also mentioned in his announcement) is possible.
2. He has the right to switch aircraft sub types in his Boeing order (actually he can do pretty much what he likes with the order - the Boeing guys LOVE him)
3. The longest route on Ryanair is today 3 1/2 hours. (Marrakesh to London). The record flight time from Boston to London (Eastbound) is around 5 hours. Not a big difference in structure.
4. RyanAir has one of the best ontime records in Europe today.

So Mr O'Leary - why wait 4 years? Boeing can deliver you a brand new plane built in around 2 weeks. So Next April sounds fine don't you think?


Cheers!

The InTheKno team have just published the first study examining the LCCs and the Travel Trade. For more information go to www.inthekno.com or email sales@inthekno.com